The ex-Newcastle defender echoed Sir Trevor Brooking's concerns over homegrown talent, highlighting a lack of young English talent playing for the big clubs in the Premier League.
Pearce Watches Newcastle Rather Than 'Big Four'
Brooking, the Football Association's director of football development, believes foreign players have harmed the national team.
Pearce admits his scouting is done mainly outside the traditional "big four" of the top flight, with only Theo Walcott coming from the teams in the Champions League.
Pearce: "The one thing that hit home to me was sitting down and looking at the fixtures and how many players under 21 that was worth me going to watch.
"The numbers aren't very big. Is it worth me going to see Liverpool? No. There's no-one on show. Chelsea? No-one on show. Manchester United?
"Most of the players that we have in the squad come from Newcastle, Manchester City, Middlesbrough and Aston Villa.
"Those four sides contribute a hell of a lot to the side we can have."
Pearce's latest squad start their qualifying campaign with matches in Montenegro and Bulgaria over the next week, starting with the clash in Podgorica on Friday. And he has named Taylor as his team captain.
England's youngsters got to the semi-finals in the summer, where they lost to Holland on penalties.